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Microfinance in India


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1 IBS, Hyderabad, Survey No. 156/157, Dontapally Village, Shankarapally Mandal, Ranga Reddy District, Hyderabad 501203, India
     

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India is believably unique in comprising two major models of microfinance. One is the time-honored Bank-Self Help Group (SHG) model and the other being Grameen replicator model followed mostly by the MFIs. Microfinance movement in India derives its support from RBI and the Ministry of Finance. The SHG movement benefits from enormous political and non-government support. Studies have established that SHG model where it has been in existence for a long time (five years or more) has an impact on poverty. However, given the small size of loans in both the models, it is hard to envision a rapid decline in poverty as these kinds of loans are insufficient to cover even investment in livelihood assets that can generate a poverty extenuating income.
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  • Microfinance in India

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Authors

Vighneswara Swamy
IBS, Hyderabad, Survey No. 156/157, Dontapally Village, Shankarapally Mandal, Ranga Reddy District, Hyderabad 501203, India

Abstract


India is believably unique in comprising two major models of microfinance. One is the time-honored Bank-Self Help Group (SHG) model and the other being Grameen replicator model followed mostly by the MFIs. Microfinance movement in India derives its support from RBI and the Ministry of Finance. The SHG movement benefits from enormous political and non-government support. Studies have established that SHG model where it has been in existence for a long time (five years or more) has an impact on poverty. However, given the small size of loans in both the models, it is hard to envision a rapid decline in poverty as these kinds of loans are insufficient to cover even investment in livelihood assets that can generate a poverty extenuating income.